Business Litigation
Delaware Court of Chancery Compels Production of Emails with Attorneys Sent Using Computers of Company Playing No Role in Subject Matter of Litigation
By Jonathan M. Stemerman
In re WeWork Litigation, Cons. C.A. No. 2020-0258-AGB (Del. Ch. Dec. 22, 2020)
Defendant SoftBank Group Corp. (“SBG”) was sued in the Delaware Court of Chancery for allegedly breaching its obligations regarding the purchase of up to $3 billion of stock of The We Company (“WeWork”). During the relevant time period, SBG owned approximately 84% of non-party Sprint, Inc. (“Sprint”) and several of SBG’s document discovery custodians wore multiple hats at SBG and Sprint.
Plaintiffs moved to compel defendant produce certain emails withheld on the basis of attorney-client privilege, none of which concerned the business or affairs of Sprint or any legal advice rendered for Sprint’s benefit. The emails sought were sent to or from the email accounts of Sprint, which played no role in the subject matter of the litigation. Defendant SBG opposed production, arguing that the custodians, while acting on SBG’s behalf, sought and received legal advice from SBG’s internal and external counsel regarding WeWork.
The issue before the Court of Chancery was whether the document custodians had a reasonable expectation of privacy when using their Sprint email accounts for SBG-related purposes such that the documents constituted “confidential communications” within the meaning of Delaware Rule of Evidence 502. In analyzing this question, the Court examined the four factors relied upon by the Court of Chancery in In re Info. Mgmt. Servs., Inc. Deriv. Litig., 81 A.3d 278 285 (Del. Ch. 2013):
(1) does the corporation maintain a policy banning personal or other objectionable use, (2) does the company monitor the use of the employee’s computer or e-mail, (3) do third parties have a right of access to the computer or e-mails, and (4) did the corporation notify the employee, or was the employee aware, of the use and monitoring policies?
The Court of Chancery granted plaintiff’s motion to compel and ordered production. First, the Sprint Code of Conduct explicitly stated that employees should have no expectation of privacy in their email. Second, while neither party produced evidence regarding Sprint’s monitoring policies, the lack of evidence did not favor SBG because it bore the burden of proving that the attorney-client privilege applies and Sprint had a clear and explicit policy reserving the right to monitor work email. Third, the Court found that Sprint had access to the work emails and the custodians did not take any “significant and meaningful steps to deny access” by Sprint. Finally, the Court found that SBG failed to provide evidence that the custodians were unaware of Sprint’s monitoring policies. A copy of the opinion is available here.